The insurance industry worldwide is undergoing a significant change accelerated by the financial meltdown and changing demographics of its customer base. In this blog, we will discuss the challenges, approaches and possible solutions to dealing with the transformation that the industry has unwittingly entered into.

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RIP Traditional Insurance, Digital Disruption Has Arrived!

Currently Insurers are finding themselves in a tempest where the digital disruption has caught a few of them completely off guard. The digital disruption has arrived with a proliferation of smart devices and advent of the digitally savvy customers. Insurers will have to display Digital motility to quickly beef up- Customer experiences and Operational efficiency. Tackling either one of them without the other would lead to dismal results. Digital insurers need to follow this twofold strategy while injecting Digital in every aspect of the business.

We are seeing a metamorphic transformation take place where the consumers, employees & stakeholders are expecting intuitive experiences and agile responsiveness leading to a buildup of necessity to innovate on the go.

A Few Trends That Brought This Disruption

 1) Digital is Necessary for Survival:

a.     A recent study estimated that 75% of insurance policies sold by 2020 would be influenced by digital
channels during either the pre-purchase stage, purchase or renewal stages.

b.     Big data analytics is helping insurers discover trends & patterns which could help them to identify risks and drive down the claims ratio.

c.  Digital is enabling new approaches in pre-sales, purchase, underwriting and operations and enables personalized offerings and self-service capabilities that drives down costs and at the same time takes the experience quotient a notch up.

2)       2) Massive Cost Reductions & Efficiency Gains

a.     Digital is helping Insurers drive down expense ratio and claims ratio.

b.     A carefully crafted digitization program can deliver massive cost reduction, reduction in turnaround time and vitalize conversion rates.

c.    Thoughtful digitization of legacy insurance processes using STP (Straight through processing) & Self-service could help insurers achieve tremendous improvements in operating margins.

3)       3) The Mobile Age & Rise of the Digital Experience

a.     Almost a majority of adults are using smart devices and with proliferation of connected device in the age of the hyper connected consumer an impetus will be imposed on the Insurers to adapt quickly.

b.   Consumers have become regulators by praising the companies providing richer experiences & services and at the same time reprimanding the organizations where they faced subpar claims experience or poor service.

c.    New players are entering market to exploit the digital disruption by providing simple processes and personalized  experiences.

4)       4) Digital Information Avalanche

a.   The amount of the data at the disposal of companies is overwhelming with the proliferation of connected devices, wearable technologies and social media. Analytics can through all the digital data and provide insurers with actionable insights leading to better targeting, pricing & claims ratio.

b.   All this data will help Insurers create better customized products leading to exponential rise in Digital customer experiences.

5)       5) Digital Ecosystem Phenomenon

a.    Consumers have evolved digitally by using smart devices for their interactions at every touch point of their life such as retailers, banks, restaurants, travel services providers etc. and this makes them expect more and more from the Insurers as well. Insurers cannot lag behind in this evolution.

b.   The experiences offered by Insurers need to preempt customer aspirations, involve them in the product creation phase and engage them through the post purchase phase and claims process.

6)       6) Instant gratification is catching up

a.     Digital insurers need to look beyond the traditional and innovate continuously.

 

Embrace Disruption

       1) Lap up Open Innovation

a.     Tap into the idea power of employees, customers and partners.

b.   Open Digital innovation labs and host coding marathons, these are the fertile grounds where you can break the barriers of siloed thinking and treble collaboration!

2) Invest in mobile to trim the sales cycle

a.   Innovative Insurers are enabling their Agents with smart devices which helps them in customizing plans using customer data on the fly leading to better selling & servicing.

3) Create intuitive digital customer experiences

a.   Digital initiatives are more inclined towards acquiring customers rather than retaining them. Go innovative- Create applications to engage customers & use collected data to enhance customer experiences

4) Use digital channels to generate local leads

a.    Our experience shows today's hybrid customers like to research & compare online but they would also like to have a reassurance of a local agent.

b.    Try and inject agent recommendations in your digital experiences and provide easy ways for the customers to find & contact a local agent according to their convenience.

5) Be a Digital Disruptor

a.    Digital insurers must innovate swiftly and build an ecosystem of value for the customers, having personalized and engaging experiences.

6) Focus on the 4 activities your customers undertake on Websites, Mobiles & Tablets      

a.   Our experience shows users generally take up these online activities while interacting with a digital insurer: Pay Insurance bills, View an insurance policy, Request for an insurance quote and checked status of a claim. Digital insurers must strive to streamline the experiences to enhance the usability and experiences during these encounters.

 

These are exciting times full of opportunities for the Insurers, so go ahead and commit to being a digital disruptor. It is no more about keeping up with your competitors, it is about continually disrupting the environment!

Comments

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